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PRINCIPLES OF MARKETING
Marketing:

Creating and Capturing Customer

Value

Saihad Shahid Rahman, Spring 2014-2015

WHAT IS MARKETING?
Marketing Defined
Marketing is the process by which companies
create value for customers and build strong
customer relationships in order to capture
value from customers in return.
Marketing is a social and managerial process
by which individuals and groups obtain
what they need and want, through creating,
offering and exchanging products (goods
and services) of value with others.

WHAT IS MARKETING?
The Marketing Process
1.

Understand the marketplace and customer

needs and wants

2.

Design a customer-driven marketing strategy

3.

Construct an integrated marketing program

that delivers superior value

4.

Build profitable relationships and create

customer delight (satisfaction)

5.

Capture value from customers to create profits

and create customer equity

WHAT IS MARKETING?

A Simple Model of the Marketing Process

Source: Adapted from Kotler et al. (2008:7)

UNDERSTANDING THE MARKETPLACE

AND CUSTOMER NEEDS
5 Core and Marketplace Concepts
Needs, Wants &
Demands

Markets

Exchange,
Transactions, &
Relationships

Market
Offerings
(Products,
Services &
Experiences)

Value, &
Satisfaction

UNDERSTANDING THE MARKETPLACE

AND CUSTOMER NEEDS
Customer Needs, Wants, and Demands
Needs are states of felt deprivation, The states
of mind (The basic human requirements)

Physical needfood, clothing, warmth, safety

Social needbelonging and affection

Individual needknowledge and selfexpression, recognition

UNDERSTANDING THE MARKETPLACE

AND CUSTOMER NEEDS
Customer Needs, Wants, and Demands
Wants are described in terms of objectives that
will satisfy needs. And wants are form of
human needs shaped by ones society,
culture & individual personality.
Demands are human wants backed by buying
power. To be demand the affordability of the
customers and willingness to pay for any
product is important.

UNDERSTANDING THE MARKETPLACE

AND CUSTOMER NEEDS
Customer Needs, Wants, and Demands
Needs: I need Food/ Cloth.
Wants: As a Bangladeshi I want rice and fish as food, Lungi
and Fotua as cloth whereas an American wants sandwich or
burger as food and jeans, t-shirt as cloth.

Demands: As Mr. Haque is a business magnate, & his

demand is having rice and fish from Radisson hotel and
clothes from a designer house. But since Mr. Khan is a
student his demand is having rice and fish from AIUB
canteen or Star Kebab and clothes from New market.
If Mr. Khan demand Food from Radisson and Clothes
from designer house that will be considered as his
want as he does not have the ability of buying it.

UNDERSTANDING THE MARKETPLACE

AND CUSTOMER NEEDS
Market OfferingsProducts, Services, and
Experiences
Market offerings are some combination of
physical goods and service oriented
benefits offered to a market to satisfy a
need or want of the customer.
- So the question is, what are the different
Offerings (Physical goods, Services and
Experiences etc.) that can be marketed as
Product?

WHAT CAN BE MARKETED?

Physical
Physical Goods
Goods

Services
Services

Events
Events

Experiences
Experiences

Persons
Persons

Places
Places

Organizations
Organizations

Information
Information

Properties
Properties

Ideas
Ideas

WHAT CAN BE MARKETED?

Services

Goods

Mark
Zuckerberg

Persons
Experiences
Events

Bill
Gates

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WHAT CAN BE MARKETED?

Organizations

Places

Ideas
Information

Properties

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UNDERSTANDING THE MARKETPLACE

AND CUSTOMER NEEDS

Value and Satisfaction

Value is the inner strength or capability of a
product that can solve the problem of a
consumer.
Customer perceived value is the customers
evaluation of the difference between total
customer benefits and total customer costs of
a market offering relative to those of
competing offers.
Satisfaction is the position of consumers mind
resulted from their expectation and the actual
performance of the product.

UNDERSTANDING THE MARKETPLACE

AND CUSTOMER NEEDS
Exchanges, Transaction and Relationships
Exchange is the act of obtaining a
desired object from someone by
offering something in return.
Transaction is a trade of values between two
or more parties. This is actually
exchange of something in between
two or more parties by setting the
monetary value of their object.

UNDERSTANDING THE MARKETPLACE

AND CUSTOMER NEEDS
Exchanges, Transactions and Relationships
Relationships consist of actions to build
and maintain desirable relationships by
delivering superior value to the customers.

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UNDERSTANDING THE MARKETPLACE

AND CUSTOMER NEEDS

Markets
Markets are the set of actual and potential
buyers of a product or service.
- These buyers share a
particular need or
want that can be
satisfied through
exchange relationships.

UNDERSTANDING THE MARKETPLACE

AND CUSTOMER NEEDS
Marketing System
Marketing System consists of all of the actors
(suppliers, company, competitors, intermediaries,
and end users) in the system who are affected by
the following major environmental forces:

Demographic
Economic
Physical/Geographical
Technological
Politicallegal
Socio-cultural
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UNDERSTANDING THE MARKETPLACE

AND CUSTOMER NEEDS
Elements of A Modern Marketing System

Source: Adapted from Kotler et al. (2008:13)

DESIGNING A CUSTOMER-DRIVEN
MARKETING STRATEGY
Marketing Management

Marketing Management is the art and

science of choosing target markets and
building profitable relationships with them.
- For managing customers properly we need
think about:

What customers will we serve?

How can we best serve these customers?
How can we increase our profitability
through satisfying our target customers?

DESIGNING A CUSTOMER-DRIVEN
MARKETING STRATEGY
Selecting Customers to Serve
De-marketing refers to the set of activities to
reduce demand temporarily or permanently
from one place or specific time to another;
the aim is not to destroy demand but to
reduce or shift it.
- It reduces the extra load from the regular
business operations and make a balance
between peak & off-peak demand situations.

DESIGNING A CUSTOMER-DRIVEN
MARKETING STRATEGY
Marketing Management Orientations
(Concepts of Marketing)

DESIGNING A CUSTOMER-DRIVEN
MARKETING STRATEGY

Production Concept
Production concept is the idea that
consumers will favor products that are
widely available or highly affordable.
- Large production and effective distribution
Channel is important.
- Price of the products remains relatively low
and they are available almost everywhere.

DESIGNING A CUSTOMER-DRIVEN
MARKETING STRATEGY

Production Concept

DESIGNING AProduct
CUSTOMER-DRIVEN
Concept
MARKETING STRATEGY

Product concept is the idea that consumers will

favor products that offer the most quality,
performance, and features for which the
organization should therefore dedicate its
energy for making continuous improvements.
- Research & Development activities for new
innovations and putting emphasis on customer
preference is essential.

DESIGNING A CUSTOMER-DRIVEN
MARKETING STRATEGY

Product Concept

DESIGNING A CUSTOMER-DRIVEN
MARKETING STRATEGY

Selling Concept
Selling concept is the idea that consumers
will not buy enough of the firms products
unless it undertakes attractive
advertisements and large scale of selling and
promotion effort.
- Communicating with the customers properly
and creating strong appeal about the
products or services among them.

DESIGNING A CUSTOMER-DRIVEN
MARKETING STRATEGY

Selling Concept

DESIGNING A CUSTOMER-DRIVEN
MARKETING STRATEGY

Marketing Concept
Marketing concept is the idea that achieving
organizational goals depends on knowing
the needs and wants of the target markets
and delivering the desired satisfactions
better than competitors do.
- Customer is the king, So meeting the changing
demand of customer is most important
point for marketers to emphasis.

DESIGNING A CUSTOMER-DRIVEN
MARKETING STRATEGY

Marketing Concept

DESIGNING A CUSTOMER-DRIVEN
MARKETING STRATEGY
Societal Marketing Concept
Societal marketing concept is the idea that
a company should make good marketing
decisions by considering consumers wants,
the companys requirements, consumers
long-term interests, and societys long-run
interests.
- Thinking and acting as a member or part of
the society and participating in different
Corporate Social Responsibilities [CSR]
activities.

DESIGNING A CUSTOMER-DRIVEN
MARKETING STRATEGY

Societal Marketing Concept

To Society

(Human & Environmental Welfare)

Societal
Marketing
Concept
To Consumers

(Want & Satisfaction)

To Company
(Profits)

DESIGNING A CUSTOMER-DRIVEN
MARKETING STRATEGY

Societal Marketing
Concept

PREPARING AN INTEGRATED
MARKETING PLAN AND PROGRAM
Integrated Marketing Program
Integrated marketing program is a
comprehensive marketing plan to create,
communicate and deliver the proposed value
to the chosen customers.
- By Combining the tools of marketing mix
(4 Ps: Product, Price, Place, & Promotion),
we can formulate a proper integrated
marketing programs for the customers.

BUILDING CUSTOMER RELATIONSHIPS

Customer Relationship Management (CRM)

Customer Relationship Management is
the overall process of building and
maintaining profitable customer
relationships by delivering superior customer
value and satisfaction.
- It deals with acquiring, keeping and growing
customers.

BUILDING CUSTOMER RELATIONSHIPS

Partner Relationship Management

Supply Chain is a channel that stretches
from raw materials to components to final
products to final buyers.

CAPTURING VALUE FROM CUSTOMERS

Creating Customer Loyalty and Retention

Customer Lifetime Value is the value of the
entire stream of purchases that the customer
would make over his or her lifetime.
- Estimating Customer Life Time Value:

Annual customer spending to a company: Taka 1500

Average number of loyalty of that customers : 20 Years
Company regular profit margin: 15%
Customer lifetime value (revenue): Taka ?
Customer lifetime value (Profit): Taka ?

CAPTURING VALUE FROM CUSTOMERS

Creating Customer Loyalty and Retention

Suppose Ms. Zamila visits KFC thrice a week and
consume 1 pkt. of combo 1 every time, and she is
going to consume it for the next/ last 15 years at the
same rate, if other things remain constant, and price
of one pkt. of Combo 1 is 280 tk, Ms. Zamilas life
time value will be

6,55,200
tk
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CAPTURING VALUE FROM CUSTOMERS

Building Customer Equity
Customer Equity is the total combined
customer lifetime values of all of the
companys customers.
- This is companys cumulative sales values for all
kinds of product or services for the time being.

- So, CRM takes a long-term view not only to

create profitable customers but to own
(making loyal) them for life and capture
their life time value.

THE NEW MARKETING LANDSCAPE

Major Developments (Changes in Marketing)

Digital age
Globalization
Ethics and social responsibility
The growth of Not-for-profit marketing
Changing world economy

THE NEW MARKETING LANDSCAPE

New
Digital Age

Ethical
Concerns

Non-profit
Marketing

Emerging
Emerging
Challenges
Challenges
Changing
World Economy

Rapid
Globalisation

END of CHAPTER - 1